Audit Notes: Bloomberg Empire Edition

Reuters’s Jack Shafer writes that Bloomberg BusinessWeek has become the best magazine in the country, his “primary source of long-form, print journalism”:

Who would have thought that “Bloomberg” and “BusinessWeek,” the two most plodding names in the history of journalism, could merge to create a superb general interest magazine? I’m not saying that every issue is a treat, but nearly every issue contains one. The most recent issue, dated Dec. 12, contains several: Felix Gillette on real estate crime in Las Vegas, Brad Stone on the maker of military drones, and a short profile by Sarah A. Topol of the life and times of a Libyan tycoon. The Oct. 31 issue has three as well: Drake Bennett on David Graeber, the brains behind the Occupy movement, Vivienne Walt on a frozen yogurt start-up in Cairo, and Daniel Grushkin on a rare earth prospector/claimholder in Alaska…

These are the kind of newsy, urgent features that you expect to find in the New York troika of great feature mags, not some biz mag that mogul-mayor-megalomaniac Michael Bloomberg purchased at a 2009 McGraw-Hill yard sale. Given the zombie prose that Bloomberg News Editor-in-Chief Matthew Winkler forces on his scribes elsewhere in the Bloomberg enterprise, we can only assume that Mike and Matt don’t know that the company also runs a magazine named after him. If you like the magazine and hope to see it continue, please make sure they don’t read this piece.

— Meantime, BusinessWeek’s Peter Coy writes an important piece on something we haven’t read much about here: Germany’s €500 billion loans to the European Central Bank:

The bottom line: Germany’s Bundesbank—BuBa for short—has quietly, automatically lent €495 billion to the European Central Bank via Target2. That lending has balanced correspondingly huge borrowings from Target2 by the central banks of weaker nations including Greece, Ireland, and Portugal—and lately Spain, Italy, and even France. They are technically “claims,” not loans. To find them you have to root around in the footnotes of the reports of the 17 national central banks of the euro zone.

If the euro zone breaks into sorry little pieces, Germany could possibly lose its entire €495 billion claim. That’s more than $650 billion. It is 60 percent bigger than Germany’s annual federal budget—and larger than the lending under the European Financial Stability Facility and other aid programs that have received more scrutiny.

Germany’s plight gives it an incentive to keep the euro zone intact. “If the euro breaks up then the whole claim is under risk,” Hans-Werner Sinn, president of the Ifo Institute, a Munich-based economic research group, says in an interview. Sinn, the first economist to focus attention on the Target2 imbalances earlier this year, wrote in a November research paper, “This may be the largest threat keeping Germany within the Eurozone.”

— Bloomberg News’s Jonathan Weil makes the case that MF Global’s collapse wasn’t caused by fear over its outlandishly huge bet on European sovereign debt, but because an accounting disclosure showed that the company would probably never make money:

Most of the quarter’s red ink came from writing down something called deferred-tax assets. Basically this item represented the money MF had thought it would save on taxes in the future, assuming it would be profitable. Net deferred taxes stood at $108.3 million as of March 31, according to MF’s 2011 annual report, which was the last time the company provided a detailed tax footnote.

MF wrote down that figure entirely last quarter. In essence, MF’s executives were admitting they couldn’t figure out how to make money.

And he writes this about ex-CEO Jon Corzine’s testimony:

Asked during his congressional testimony last week whether he authorized the transfer of customer funds from their segregated accounts, the former New Jersey governor replied under oath: “I never intended to break any rules.”

Note that he never answered the question. If the feds can’t find a bunch of people to arrest over this heist, they’re no better than Corzine.

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